Newspaper article THE JOURNAL RECORD

Small-Company Stocks Lead Decline

Newspaper article THE JOURNAL RECORD

Small-Company Stocks Lead Decline

Article excerpt

NEW YORK (AP) _ Small-company stocks led share prices lower for a second day Wednesday as investors worried about the economy and corporate profits.

The Dow Jones industrial average fell 18.17 points to 3,588.93.

Declining issues outnumbered advances by about 7 to 3 on the New York Stock Exchange.

Volume on the floor of the Big Board came to 278.70 million shares as of 4 p.m., up from 229.32 million in the previous session.

For a second day, stocks started in negative territory and never looked back, although on Wednesday they recovered from their intraday lows.

Analysts attributed the selloff to a combination of concern about the economy following last week's spate of bad economic news and the selling of stocks that have run up in value over the past two-month summer rally.

Alfred Goldman, director of technical market analysis, with A.G. Edwards Sons described the market decline as, "normal, healthy consolidation rather than anything more severe."

Eugene Peroni, director of technical research at Janney Montgomery Scott said investors were "concerned about the economy, enough to take tidy profits, but not enough for wholesale dumping of stocks."

For a second day, stock investors ignored a long-bond rally and corresponding dip in long-term interest rates to new lows.

Although stock investors like the low yields that come with higher bond prices, they dislike the indications of significant weakness in the economy given by the sharp bond rally of recent days, analysts said.

That could bode ill for corporate profits, they said.

The bond market rallies on sour news about the economy _ an indication that inflation is not a threat. Inflation eats into the value of fixed-income securities such as treasuries.

Before moving higher again, the stock market will need evidence the economy is strengthening and corporate earnings are on the rise, Goldman said.

Partly because of concern about the economy, the Nasdaq composite index, one of the best-known measures of small-company stocks, led the pack down on Wednesday, tumbling 8. …

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